Luxury stores warned: build it and they won't always buy

The impending openings of two high-end fashion boutiques in the CBD has industry experts doubting the future of luxury shopping in Brisbane.

Luxury leathergoods retailer Hermes - perhaps best known for its pricey Kelly and Birkin handbags and silk scarves - is set to launch a flagship store on Edward Street in December.

It will follow the September opening of an exclusive, two-storey menswear boutique, Richards&Richards, next door.

Scott Driscoll, of the United Retail Federation, said the health of the upper-mid to high-end stretch of the retail market was poorer than what people might expect.

He said new traders would have to sustain “a long burn” if they had hopes for sustainable success.

“Build it and they would come is a mantra you find with some,” Mr Driscoll told “But I hope there's still that allowance for a slow start.

“I don't expect things to turn around this calendar year.”

Mr Driscoll said retail pain among high-street and luxury retailers was being felt, due to a slow-down in discretionary spending among high income earners.

He said they were cutting back on all but very top end luxury items that carried investment appeal, such as art.

In late January this year, the Brisbane arm of high-profile Australian boutique retailer Belinda closed its doors to “refocus attention on other, more established locations".

The store opened in a lavish, custom-fit location on Wandoo Street, New Farm, in mid-2008 and stocked international labels including Stella McCartney, Marni and Lanvin.

However surviving Belinda competitor Amber Long, director of Brisbane fashion group Jean Brown, says it's not all bad news for local luxury retailers.

Launched as an accessories boutique in July 2007, the Jean Brown group now includes three boutiques in inner Brisbane.

They offer a combination of Australian and international designer labels aimed at fashionistas with a high disposable income - including Yves Saint Laurent, Miu Miu, Alexander McQueen and Balenciaga.

Ms Long said demand for luxury goods was enough to sustain a healthy business but that significant growth stemmed from her group's multi-faceted retail approach.

“Since launch, we identified the importance of engaging with our clients both at bricks-and-mortar store level and in the digital landscape,” she said.

“We respect that our clients are sometimes time poor or located outside of Brisbane in rural and regional Queensland – that's why it was important for us to develop a strong presence online.

To this end, Ms Brown said her business launched a fully served, online mail-order catalogue in 2008.

This approach, she said, was important to the growth of her business because high-end retailers in Brisbane were no longer solely competing amongst themselves.

“We have to compete with online boutiques or other retailers with digital presences who offer comparable goods,” she said.

“Bricks-and-mortar retailers have to take into account e-boutiques when it comes to pricing benchmarks.

“Price comparisons do compel people to potentially shop around online so it's important to be competitive in that space as well as in your immediate market.”

It's an industry development that Mr Driscoll said particularly affected high-end traders already facing stiff direct competition.

Echoing Mr Driscoll, Ms Long said that local businesses like hers faced a 'diversify, digitise or die' situation thanks to the growing sophistication of the online retail sector, particularly with improved access to international boutiques or department stores offered through sites such as the recently launched

An initiative of online payment service giant PayPal, the website offers Australian consumers direct access to US stores and brands otherwise unavailable to shoppers without an American credit card or shipping address.

Spokesman Adrian Christie said meant Brisbane buyers could secure better prices on high-end goods offered at stores such as Jean Brown by buying directly from American distributors, capitalising on a strong Australian dollar.

“Online trading allows people to sell anywhere in the world and that means a big shift in where your customer base can come from,” Mr Christie said.

“Consumer demand is pointing towards a need for retailers to move online in Australia as currently, much of the money in that market is going overseas.

“I don't think a service like ours undermines the potential for high-end Brisbane boutiques to succeed if they're competitively priced – some customers also will always prefer that tangible experience.”

This article Luxury stores warned: build it and they won't always buy was originally published in The Sydney Morning Herald.